5:14pm:Shares suffered their biggest fall in nearly a month as the RBA elected to hold the official cash rate at its record low 2.5 per cent for a tenth month, as was widely expected.

The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index each lost 0.7 per cent on Tuesday to 5479.7 and 5460.5, respectively. Following the rates announcement the market was pricing the chances of a rate hike in the next 12 months at 20 per cent, compared to a zero chance a day earlier.

Local shares started to tumble minutes after trading began having taken a soft lead from offshore. Shares on Wall Street and around Europe were broadly flat on Monday night, while London’s FTSE added a modest 0.3 per cent, amid expectations the European Central Bank will act to increase stimulus when it meets on Thursday.

The ASX continued to decline in the afternoon despite Asian sharemarkets providing more support. Hong Kong’s Hang Seng and Japan’s Nikkei were each trading about 0.7 per cent higher when the Australian market closed.

“We are likely to see a cap on the local market around current levels until a catalyst for company earnings comes along,” Morgans stockbroker Stephen Pill said.

“A major theme at the moment is the reaction to last month’s federal budget, with consumer confidence slumping and a number of cyclical stocks, such as ALS Ltd, issuing profit warnings.”

In an accompanying statement to the rates decision, RBA board members upgraded their global growth outlook while welcoming slower house price growth domestically. The RBA also noted the dollar remains high by historical standards, “particularly given a decline in commodity prices”.

4:43pm: Contractor UGL is undervalued no matter what happens to property services arm DTZ, according to Deutsche Bank analysts.

As talks between UGL and private equity firm TPG come to a head, Deutsche upgraded the stock to “buy” and said UGL was worth up to $9.31 a share. The company was trading at $7.40 a share on Tuesday morning.

“Based on a DTZ sale price of $1.0 billion-$1.15 billion, we estimate UGL is worth $7.00-$7.91/share,” the broker told clients.

“Under a DTZ demerger scenario, we estimate the potential combined value of the de-merged businesses is $7.39/share. If DTZ is retained, we estimate UGL is worth $7.46-$9.31/share.”

The analysts said the market had undervalued UGL’s engineering division, concerned about its earnings outlook and debt levels.

Deutsche said UGL’s debt had peaked and should fall as cash flow strengthened.

4:32pm: Aside from a brief period of optimism around the release of economic data in the late morning, the market started the day lower and kept heading in that direction right up to market close.

The ASX 200 and All Ords fell 38 points each, or 0.7 per cent, to 5479.7 and 5460.5, respectively.

Consumer discretionary stocks were hit the hardest after retail sales came in slightly lower than expected, while stronger than expected trade figures may have boosted fears of a rate rise; in any case the sector dropped 1.6 per cent with a host of retailers among the worst performing stocks (more on that when we post the "best and worst" for the day).

The big four banks all fell, aside from ANZ which was flat, which as a grouping was the biggest drag on the market. Macquarie fell 1.6 pr cent.

Wesfarmer was the biggest single detractor, falling 1.3 per cent, while Woolworths also dropped 1.1 per cent.

Miners had been up as a group early, but BHP ended the day 0.5 per cent down, although Rio added 0.7 per cent.

3:52pm:Westfield Retail Trust lawyers met this afternoon in Sydney’s Supreme Court asking the judge for permission to submit a new supplementary notice - essentially asking to approach their unitholders with a new offer that takes into account Westfield supremo Frank Lowy’s apparently off-the-cuff remark that he was prepared to create a new vehicle if his demerger plans were voted down.

The preliminary date set down for the next meeting is June 20.

After an hour of dry legal argument there’s a short adjournment now while the judge decides what details can be included in the new documents.

3:34pm: While most observers are busily cutting their growth forecasts for China, Nomura has lifted its predictions, due to improving data and Beijing's mini-stimuli. It’s worth noting that Nomura has been (and still is) pretty bearish about the Chinese property market.

We raise our GDP forecast for Q2 to 7.4% y-o-y from 7.1% and for full-year 2014 to 7.5% from 7.4%. The revision reflects improvements in leading indicators in May and the intensification of policy easing measures already taken, with more expected.

We expect growth to rebound in H2, in contrast to the consensus expectation of a decline in growth.

We remain concerned about the structurally oversupplied property sector and the amount of leverage in the economy. We expect growth to slow to 6.8% in 2015 as inflation rises, limiting the scope of future policy easing.

The revisions mostly reflect two issues, Nomura says:

First, a surprising pick in economic momentum in May, as the official PMI, the HSBC PMI and the MNI China business sentiment indicator all strengthened. This suggests industrial production growth in May will improve from its April level of 8.7% y-o-y and on a quarterly basis is unlikely to fall sharply from 8.7% in Q1.

Second, policy easing measures have clearly intensified in recent months, the cumulative results of which are starting to be felt on the macro front. There has been a long list of announcements in recent months, the latest being another targeted reserve requirement ratio (RRR) cut announced on May 30.

The most important message we take from these announcements is a change of policy reaction – the government is clearly more concerned about downside risks to growth from the ongoing property market correction than it was a month ago.

This suggests to us that it will likely loosen fiscal and monetary policy further in Q3, putting off the downside risks to growth to 2015.

3:21pm: Analysts have approved Virtus Health’s first international foray, after the fertility company bought a 70 per cent stake in Irish fertility medicine clinic SIMS IVF for €15.49 million ($22.8 million).

In its presentation to the market, management highlighted the low levels of IVF use in Ireland compared with Australia. The number of IVF cycles performed, per 1 million of population, is 750 in Ireland, compared with 1,642 in Australia.

UBS analyst Andrew Goodsall said the rate in Ireland was consistent with other European countries, essentially ruling out a rapid rise to Australian levels.

“Prices are high and affordability low (relative to Australia) given limited government assistance,” he said of the European Union. “We expect growth in the Irish market to continue at its recent run-rate of about 4 per cent per annum.”

UBS’s Goodsall upgraded his target price to $9.15, from $8.65. “In time, we would expect the relative unconsolidated EU market to present further accretive acquisition opportunities,” he told clients.

CLSA analyst Dave Stanton prefers Virtus to the soon-to-be listed Monash IVF, which is rattling the tin among institutions today and tomorrow to raise almost $300 million.

Virtus trades on a 17.3-times price to earnings multiple, while Monash will look to raise in the range of 15.1 to 17.0-times. “We don’t expect another Virtus-like boost to performance,” he said of the proposed Monash float.

Morgan Stanley analyst Sean Laaman said the SIMS acquisition increased Virtus’ net debt to $155 million. He said the company’s “highly cash generative nature” would see net debt reduce to $129 million by the end of financial 2015.

3:05pm: And here's what economists are saying in their first reactions:

JPMorgan chief economist Stephen Walters

It's largely what they said last time. There's a reference to the exchange rate being high, which they said last time, but they're highlighting that the gap between the commodity prices and the Aussie is getting wider, which they didn't acknowledge last time.

There's quite a lot of stuff about other sectors emerging (in relation to capital expenditure) but they still describe it as tentative so even that lacks a bit of conviction.

It's still a work in progress. Things are working the way they'd hoped given the easing they've already delivered, but they're waiting for the more compelling evidence.

NAB senior economist David de Garis

On the rate decision - very little change in the statement there. For GDP tomorrow we're expecting something around 1 per cent. We were expecting a fraction below that. The GDP-e will be reasonably strong, the GDP-i will be softer. Wages and profits have been soft.

(Next rate move:) probably not for at least a year. The economy's still trying to make this light jump from resource investment to more domestically based growth and it's just taking time - one or two steps forward and one step back at the moment.

RBC Capital Markets Su-Lin Ong

Despite some softer housing approval numbers, they still continue to characterise the construction upswing as strong. Despite some improvement in non-mining capex plans they still talk about them as being tentative. Despite some numbers in the past few months, there's really no change to the big picture view at all.

It's telling you they're very comfortable with rates where they are, and see no reason to shift.

They've highlighted the disconnect between commodity prices and the Aussie. It's a veiled reference to the notable drop in iron ore prices yet the currency has proved resilient. When they talk about fundamentals, it further cements the view that the currency remains high and possibly not justified by fundamentals.

They've been frustrated before by the fundamentals when it comes to the currency, and it's probably no different this time around.

2:39pm: Here's the full statement by the governor on today's RBA decision. A lot of same-same to last month's statement, apart from the bit pointing out how strangely (and worryingly?) low volatility in many markets is:

Growth in the global economy is continuing at a moderate pace, helped by firmer conditions in the advanced countries. China's growth appears to have slowed a little in early 2014 but remains generally in line with policymakers' objectives. Commodity prices in historical terms remain high, but some of those important to Australia have continued to decline of late.

Financial conditions overall remain very accommodative. Long-term interest rates have fallen further and risk spreads remain low. Emerging market economies are once again receiving capital inflows. Volatility in many financial prices is currently unusually low. Markets appear to be attaching a very low probability to any rise in global interest rates over the period ahead.

In Australia, the economy grew at a below-trend pace in 2013 overall, but growth looks to have been somewhat firmer around the turn of the year. This has resulted partly from very strong increases in resource exports as new capacity has come on stream, but smaller increases in such exports are likely in coming quarters.

Moderate growth has been occurring in consumer demand and a strong expansion in housing construction is now under way. At the same time, resources sector investment spending is set to decline significantly. Signs of improvement in investment intentions in some other sectors are emerging, but these plans remain tentative, as firms wait for more evidence of improved conditions before committing to significant expansion. Public spending is scheduled to be subdued.

There has been some improvement in indicators for the labour market in recent months, but it will probably be some time yet before unemployment declines consistently. Recent data confirm that growth in wages has declined noticeably. If these and other domestic costs remain contained, inflation should remain consistent with the target over the next one to two years, even with lower levels of the exchange rate.

Monetary policy remains accommodative. Interest rates are very low and for some borrowers have edged lower over recent months. Savers continue to look for higher returns in response to low rates on safe instruments. Credit growth has picked up a little. Dwelling prices have increased significantly over the past year, though there have been some signs of a moderation in the pace of increase recently.

The earlier decline in the exchange rate is assisting in achieving balanced growth in the economy, but less so than previously as a result of the higher levels over the past few months. The exchange rate remains high by historical standards, particularly given the further decline in commodity prices.

Looking ahead, continued accommodative monetary policy should provide support to demand, and help growth to strengthen over time. Inflation is expected to be consistent with the 2–3 per cent target over the next two years.

In the Board's judgement, monetary policy is appropriately configured to foster sustainable growth in demand and inflation outcomes consistent with the target. On present indications, the most prudent course is likely to be a period of stability in interest rates.

2:21pm:Japanese stocks are on a roll, rising for nine straight sessions (the Topix) or at least eight out of nine (the Nikkei), as the yen weakens further. The indices are up a further 0.7 per cent today.

More tailwind for the Tokyo bourse could come as Japan's public pension fund, the world's biggest, mulls raising its investment in domestic stocks, from the current level of 12 per cent.

Yasuhiro Yonezawa, the recently appointed head of the investment committee of the $1.36 trillion Government Pension Investment Fund, said: "Twenty per cent would not necessarily be too high a hurdle" for the GPIF's weighting of Japanese stocks, the Nikkei financial daily reported.

Global financial markets are keenly watching the GPIF's investment strategy as the fund, bigger than Mexico's economy, is a huge investor and a bellwether for other Japanese institutional investors.

The government overhauled the GPIF's structure in late April, appointing new committee members in a push towards Prime Minister Shinzo Abe's goal of a more aggressive investment strategy.

GPIF now targets 12 per cent of its investments in Japanese stocks, 60 per cent in domestic bonds, 11 per cent in foreign bonds, 12 per cent in foreign stocks and 5 per cent in short-term assets.

GPIF could lower its weighting in Japanese government bonds and shift the proceeds into Japanese stocks, foreign bonds, US and emerging markets equities, the Nikkei quoted Yonezawa as saying.

1:58pm: A little bit over half an hour to go until the RBA announces its June rates decision.

The central bank is considered certain to leave its cash rate unchanged at 2.5 per cent and maintain a steady policy outlook.

Many market watchers, however, will be looking for any comment on the high Aussie dollar and falling prices of iron ore.

"We now think it's likely the RBA will commence 'open mouth operations', once again making comments around the AUD being uncomfortably high," says UBS economist Scott Haslem.

"While we doubt we'll see the RBA move to re-instate an explicit easing bias anytime soon, this is likely to see the RBA sounding a little more 'dovish' in its tone, whether at today's meeting, or over coming months."

1:46pm:Iron ore futures in Dalian have slipped for a fourth straight trading day, hovering near their lowest since their October launch, weighing on spot prices that have already fallen by almost a third this year.

Chinese steel futures also dropped for a fourth session to hit their lowest on record, reflecting pressure on demand from a weak property sector and hefty supply as markets reopened after a holiday weekend.

The growth in China's housing prices slowed to a near one-year low in April, while property investment also lost steam in the first four months of the year as developers feel the pinch from slowing sales and rising borrowing costs.

While stocks of steel products among Chinese traders have been falling, those held by producers have been rising, suggesting an uncertain outlook for demand has been keeping traders from replenishing their inventory, says Zhou Ting, analyst at Jinrui Futures in Shenzhen.

"Given the risks in the real estate market, traders and end-users are not willing to increase their stocks and this is putting pressure on the mills," says Zhou, adding those risks had overshadowed recent signs of recovery in China's manufacturing sector.

Iron ore for delivery in September on the Dalian Commodity Exchange fell 1 per cent to 678 yuan a tonne, a tad above the contract low of 677 yuan reached on Friday. Chinese markets were shut on Monday for a public holiday.

The most-active rebar for October delivery on the Shanghai Futures Exchange touched a session low of 3042 yuan ($US490) a tonne, the lowest for a most-traded contract since the bourse launched the product in March 2009.

1:30pm: The good news for News Corp print zealots is that its new co-chairman, Lachlan Murdoch, knows how to make a paper profit even in radio land.

The radio stations owned by Murdoch reported a slide in the ratings today but the News Corp heir apparent reported a big win where it counts.

Murdoch’s Illyria Investments, home of his radio group Nova Entertainment, reported a net profit of $58.15 million for the year ending December 31 on revenue totalling $110.2 million.This compares to a $210,000 net profit for the prior year.

The key ingredient in the profit figure was Illyria’s acquisition of the other 50 per cent of the Nova radio group from Britain's Daily Mail and General Trust on April 1 last year. It generated a $58.5 million net gain on revaluation of the 50 per cent of the Nova radio group that Murdoch already owned.

Murdoch would still have done well without the paper profit. According to the financial accounts, the group reported an operating profit before tax of $10.7 million, excluding the valuation gains and foreign exchange.

The most interesting item was how the $86.2 million acquisition of the remaining 50 per cent of Nova was financed. The accounts report that ‘‘this acquisition did not involve cash flows as it was funded through intercompany loans with related parties’’ for the entire $86.2 million.

No detail was offered on who these ‘related parties’ are.

The big news for the latest radio ratings period was the Kyle and Jackie O Show losing its ratings crown to ARN stable mates The Jonesy and Amanda show on WSFM.

1:18pm:NAB has stepped up its push to win more credit card business, with a new offer giving new customers zero per cent interest on new purchases for the next year.

The decision follows a move by NAB to increase its unsecured lending earlier this year, which resulted in it cutting personal loans and offering zero per cent interest rates on credit card balance transfers. With its flagship business bank losing market share, NAB has been expanding in unsecured lending.

Official figures last week showed it had expanded its credit card book by an annualised rate of 32 per cent during April - most probably the result of its previous offer in the market.

The bank today also said it had experienced a 120 per cent year-on-year increase in credit card balance transfers.

This morning it also has raised variable interest rates on its personal loans to 12.99 per cent. Despite this increase it still has the lowest personal loan interest rates of the big four.

The lower grade means Atlas is paid a discount to the benchmark price of the day for its iron ore, but Atlas boss Ken Brinsden said that discount was widening at the moment, as increased exports gave buyers a choice of product.

"Increasing supply is placing further downward pressure on 58% (iron) products, with significantly increased discounts to the 62% index being experienced for that product while the market adjusts to accomodate the increased presence of this type of product," he said during a presentation in Sydney today.

The benchmark iron ore price rose slightly overnight from $US91.80 to $US92.10, but is still more than 30 per cent lower than at the start of 2014, and many pundits expect it to fall further in coming weeks. But on the positive side, Atlas is the second iron ore miner over the past 24 hours to suggest that the Indian market is opening up for Australian producers.

Atlas said today that the reduced price levels were making Australian iron ore competitive in India, with Atlas completing its first sale into the subcontinent during May.

12:41pm:Financial Index Wealth Accountants is in a bidding war with private equity firm Anchorage Capital Partners to gain control of the nation’s fifth largest accounting firm based on revenue, Crowe Horwath Australasia.

It emerged Monday after Crowe entered a trading halt that Findex, which is part-owned by KKR Asset Management, the local arm of United States private equity firm Kohlberg Kravis Roberts, had a multi-million dollar takeover offer.

Anchorage, best known for ramping a $94 million Dick Smith Holdings investment into a $520 million listing within 14 months last year, made a non-binding and “highly conditional” privatisation proposal to Crowe in March.

Findex has just bedded down its $130 million acquisition of Centric Wealth. The transaction, completed in March, solidified Findex’s position as the biggest non-bank affiliated financial planning group in the country with $7.6 billion in funds under management.

Shopaholic Findex chief executive Spiro Paule has turned the focus of his aggressive growth by acquisition strategy to the related field of accounting.

12:20pm:Macquarie Group’s domestic mortgage book will almost double to $30 billion in two years, transforming the investment bank into one of most significant players in the market, and allowing it to nip at the heels of the four major banks.

But the biggest threat is to the regional banks.

In a research note, JPMorgan analysts characterise Macquarie’s aggressive incursion into domestic mortgages as “more meaningful than investors or even Macquarie management themselves may suggest”.

The investment bank notes growth has been exceptional over the past two years with the portfolio expanding by around 50 per cent to $17 billion.

Further growth will be fuelled by the redeployment of some $10 billion of surplus cash management account (CMA) deposits.

JPMorgan argues regional lenders have the most to lose from Macquarie’s mounting appetite for this market, pointing out that smaller institutions such as the Bank of Queensland have, in recent times, opted to sit on the sidelines, in order “to preserve margin”.

But the analysts believe this strategy results in BOQ “being locked out of the market” and ultimately weakens its ability to compete against the investment bank - once dubbed the Millionaire’s Factory.

JPMorgan is targeting a $200 million uplift in revenue at Macquarie over the next two years.

The bank has maintained its neutral rating but lifted its price target on the stock to $54.62 from $54.34.

12:00pm: And the last bit of economic data today, the current account deficit almost halved in the first quarter thanks to booming shipments of iron ore and coal, in fresh figures showing underlying strength across the economy.

The current account deficit narrowed to $5.7 billion from $12.7 billion in the December quarter, as exports swung to a surplus of $3.6 billion from a deficit of $609 million, the ABS said. Economists had tipped a deficit of $7 billion.

The surge in volumes of goods shipped will add 1.4 percentage points to gross domestic product growth in the first quarter, according to the bureau, which will release national accounts on Wednesday.

11:56am:China's factory sector turned in its best performance in four months in May as export orders improved although activity still contracted, a private survey showed this morning, adding to signs the economy may be stabilising.

The final reading of the HSBC/Markit purchasing managers' index (PMI) for May rose to 49.4, lower than a preliminary reading of 49.7 but up from 48.1 in April.

The final PMI was weaker than the flash reading due to an upward revision of the stocks of finished goods, HSBC said.

The official PMI hit a five-month high of 50.8 in May from April's 50.4, the National Bureau of Statistics said on Sunday, beating market expectations of 50.6.

The official PMI is weighted more towards bigger and state-owned enterprises and tends to paint a rosier picture than the HSBC/Markit survey, which focuses more on smaller private firms.

"The final PMI reading for May confirmed that the economy is stabilising, but it is too early to say that it has bottomed out, particularly in light of a weaker property sector," said Qu Hongbin, chief economist for China at HSBC.

"The lack of a sustainable growth momentum warrants stronger policy support. We expect both monetary and fiscal policy to be loosened gradually over the coming months."

The government has unveiled a slew of targeted policy measures, including faster investment in railways and public housing, in recent weeks to underpin the slowing economy.

Last week, China's cabinet announced fresh supportive measures, including cutting reserve requirement ratios (RRR) for more commercial banks, expanding re-lending and bond financing to support small firms.

The central bank has already cut RRR for rural banks.

On the fiscal front, the finance ministry has urged local governments and state agencies to quicken budget spending.

Chinese leaders have ruled out the possibility of any big fiscal stimulus as they focus on reforms to try to put the economy on a more sustainable footing over the long term.

11:47am:Government consumption and investment spending fell 0.8 per cent in the first quarter to an inflation-adjusted $85.88 billion, the ABS reported this morning.

Government spending for consumption rose 0.3 per cent in the first quarter to $68.42 billion in real terms.

However, investment spending by the government and public enterprises fell by 5 per cent to $17.46 billion. This series has been volatile due to accounting for the transfer of assets between the public and private sectors.

The data will feed into the gross domestic product report for the first quarter due tomorrow.

11:47am: Meanwhile, consumer confidence seems to have bottomed after plunging in the wake of the Federal Budget, but households are negative about their own financial situation, according to a survey.

ANZ-Roy Morgan’s weekly consumer confidence survey shows the first signs that consumers are adjusting to news from last month’s budget, as consumer confidence rose 2.9 per cent, its first lift in six weeks.

Confidence remains 12 per cent lower than it did six weeks ago, when it began to fall steeply on the back of budget leaks. However, it is not all good news. While confidence in economic conditions next year drove most of the increase, rising 14.5 per cent, households perceptions of their own financial situation deteriorated 3.1 per cent.

This last figure is concerning to economists as it may signal that households are preparing to spend less in the short term this year, despite being more positive about what next year holds.

ANZ is still expecting consumer spending to increase, but the budget announcements may affect the amount of spending and when it occurs. “The confidence impacts from the budget may weigh on consumer spending in the near-term and impact on the speed of that recovery,” the survey warned.

In our view, the weakness in the month was likely in part due to the close proximity of ANZAC day and Easter, which appears to have weighed on spending in some categories. Even still, after a strong pick-up since August last year, retail spending growth has noticeably weakened over the past three months.

While consumer confidence has fallen sharply since negative newsflow related to the Commonwealth Budget first began, it rose 2.9% last week (the first time in six weeks) which is a tentative, positive sign that the sharp deterioration in consumer confidence is abating.

ANZ’s bottom line for the household consumption outlook remains that consumer spending will improve this year, although the confidence impacts from the Budget may weigh on consumer spending in the near term – and it will be important for the household consumption outlook to see where confidence eventually settles.

11:13am: A storm alert today from Simon Derrick at the Bank of New York Mellon. He cites three warnings from leading central bankers, all alarmed by the remarkable disregard for risk in the equity, credit, and currency markets.

The Bank of England's Deputy Governor Charles Bean says the lack of volatility is "eerily reminiscent" of the run up to the financial crisis in 2007-2008. Investors are turning a blind eye to a large fact: that central banks are intent on extricating themselves from QE and emergency policies come what may, and this is going to be a painful experience.

Italy central bank Governor Ignazio Visco issued a similar warning on Friday: "Volatility on the financial markets in the advanced economies has subsided to well below the historic norm, reaching levels that in the past sometimes preceded rapid changes in the orientation of investors."

In America, Dallas Fed chief Richard Fisher has been warning for several weeks that the decline in the VIX index measuring volatility is an accident waiting to happen. One almost has the impression that he is itching to inflict some "two-risk way" into markets to shatter this complacency.

Mr Derrick says dash for yield is all too like the last stage of the carry trade just before Russia and East Asia blew up in 1998, and again in the summer of 2007 when investors seemed to lose all fear. Both episodes ended with a bang, at first signalled by a surge in the Japanese yen.

10:54am: While the RBA is not expected to make any move on official interest rates, the falling iron ore price and slumping consumer confidence are expected to be at the top of the central bank's list of priorities.

The price of iron ore, one of Australia's most valuable exports, has plunged more than 30 per cent in 2014, but this has not been matched by a weakening of the local currency, which is up 3.6 per cent for the year.

''I would look at what they're going to say about the Aussie dollar in conjunction with the fall in iron ore prices because if the Aussie dollar had fallen in line with the iron ore price, it's less detrimental to Australia,'' HSBC chief economist Paul Bloxham said.

The RBA is unlikely to change its rhetoric in this afternoon's statement and are expected to keep interest rates quite low for some time, Mr Bloxham said.

Credit Suisse interest rate futures price in a 4 per cent chance of a rate cut today, and a 16 per cent chance of a rate hike in the next 12 months.

The central bank may argue the high dollar is holding back growth, Nomura rates strategists said.

''We and the market expect no change in policy, though we see the risk that a dovish tilt to the statement may take place. Helping that view would be the recent fall in confidence due to the budget, and the sharp fall in commodity prices,'' Nomura said.

10:37am:Iron ore producers are expected to cut or push back non-essential spending until they have clarity about the bottom of the current price fall, mining executives have warned.

Grange Resources managing director Wayne Bould said discretionary spending such as training programs, external consulting and equipment upgrades should all be deferred.

Mr Bould's comments came as the iron ore prices slide continued down to $US91.80 per tonne over the weekend.

''When we see the numbers take a dive as they have and you don't see any clear bottom then a prudent CEO would implement a pretty straightforward plan to curtail any optimistic activity and lock down,'' he said.

''When it levels out and you understand where the bottom is and what that means in terms of costs of production, then we can re-evaluate.

''The trick for us is to protect our free cash flow and the value of our asset, so we are pretty good at belting the cost down on a short-term basis, it's not sustainable long term, but you can operate pretty cheap for a while.''

A $US10 movement in the iron price translates to a $US2.1 billion difference to Rio Tinto's bottom line, and $US1.2 billion for BHP Billiton, which is roughly half as exposed as its rival, according to Credit Suisse figures for the 2015 year. When applied to earnings, the Credit Suisse figures show a $US10 price movement had a 20 per cent impact on Rio and 9 per cent on BHP.

Diversified miners are ramping up iron ore production, while single-metal miners continue to add to supply, ultimately leading to oversupply and a further slump in the iron ore price.

9:56am: A report on the potential impact of CSG extraction in Sydney's water catchment says fracking should be banned if the risk to human health can't be known with a high degree of certainty.

The government placed a moratorium on coal seam gas activity in the catchment area pending the release of the Chief Scientist's report, which was handed to the government on Friday night.

It says the use of chemicals in the fracking process would need to be severely controlled or even banned.

Chief Scientist Professor Mary O'Kane says there should also be strict controls on how companies manage produced water, which contains high level of salinity and other harmful chemicals.

"We've also suggested that in water quality that extra precautions be taken and that produced water if any CSG activity were to take place should be treated specially and not just put into the general catchment water," she said.

"And even though we went through the sums and there probably wouldn't cause trouble we did suggest it be treated specially".

9:48am: Some 95 per cent of the extra credit extended by banks since mid-2012 has financed residential or commercial property, according to an analysis that highlights the lopsided nature of the post-mining boom economic transition.

In slashing interest rates to record lows, the Reserve Bank is trying to encourage borrowing and spending by households, while stimulating non-mining investment.

The central bank hopes this will help cushion Australia from a sharp fall in resources spending that will hit the economy in coming years.

However, analysis of official figures by UBS shows almost all the net credit growth since 2012 has flowed into property, as opposed to new productive plant or equipment.

The research by banking analyst Jonathan Mott found that of the total increase in credit since mid-2012, $60.6 billion had financed owner-occupied housing, $45.8 billion residential investment properties, and $10 billion had gone into commercial property.

Non-property business lending rose by just $3.2 billion, accounting for only 2.6 per cent of total credit growth over the period.

The finding illustrates the extent to which record low interest rates have helped to funnel tens of billions of dollars in debt into property, while doing little to spark increased business lending.

The soft growth in business credit is a headwind for all the major banks, but in particular the country's biggest business lender, National Australia Bank, which is also losing market share to rivals.

9:33am: At last the big end of town can stop talking about why gaming billionaire James Packer and his best friend Nine Entertainment boss David Gyngell partook in a fisticuffs set-to on the pavement at Bondi Beach and instead turn its attention to what Solomon Lew is hatching at David Jones.

There are theories aplenty but my money's on the one that says Lew wants to sell his stake in Country Road, rather than make a bid for David Jones. It's greenmail with a twist. But more on this in a moment.

Last week Lew emerged with a 0.65 per stake in Australia's grande dame of top-end department stores just when it seemed South African retail group, Woolworths, was a shoo-in to buy it.

To further muddy the waters there now seems to be 10 per cent of the stock whose ownership is unclear.

If Lew has his foot on these shares - plus some more as people were suggesting yesterday - he could thwart the takeover offer which, incidentally, is pitched at a pretty generous price.

But it's worth sifting through the theories and their credibility.

First, some are suggesting he wants to buy David Jones himself. This is highly unlikely.

Lew is a retailer who never pays retail. He has had plenty of opportunities to acquire David Jones at lower prices and hasn't bitten the bullet. He has a history of never becoming involved in contested bids and prefers to buy assets from receivers.

Indeed it's a fair bet he has been waiting in vain for David Jones to go broke for years. Here's another thing about Lew - he is really patient.

9:28am:Contractor Decmil Group has announced it has won "strategic" government contracts as the company moves to diversify its business away from the waning resources sector.

Decmil also bucked the downbeat tone among its peers to declare it is "well placed to deliver a strong result" for this financial year, the company said in an ASX statement.

The new business wins include demolishing and replacing an existing bridge in Marylands, Western Australia, as well as upgrading an Australian Defence Force training facility in WA's Port Hedland.

“These project wins are significant achievements for Decmil as they represent firsts for the company," Decmil chief executive officer Scott Criddle said in the statement. "The company’s strategy is to broaden the range of services that we can offer to our clients, with a key focus on the government sector."

Criddle also said that the company is "well placed to deliver a strong result for FY14 and to adapt to the current environment".

“Work in hand for FY15 is taking shape with some great opportunities on the horizon," he said.

9:15am:Myer has responded to a drop in consumer spending by postponing its annual mid-year clearance while unveiling a one-day stock-take sale this week to entice shoppers into stores.

Australia's largest department store chain is offering discounts as deep as 60 per cent on womens apparel, 50 per cent off menswear and 40 per cent off manchester at the one-day 'stocktacular" sale in-store and online on Wednesday.

Myer plans to hold a series of 'countdown' sales in the lead up to the mid-year clearance, which kicks off on Wednesday June 18 and runs until July 27, or until stocks last.

In the past two years, both Myer and David Jones have launched their mid-year clearance sales around June 5 or 6 and finished by mid-July.

Myer postponed its mid-year clearance for almost two weeks after feedback from customers and in the hope that cooler weather will fuel demand for winter clothing and footwear.

David Jones mid-year clearance starts this week, the same week as it did last year.

Last week both Myer and David Jones said they had no current plans to delay or bring forward their mid-season sales,

But after record-breaking autumn temperatures and a sharp drop in consumer sentiment after the Federal budget, retailers have been left holding higher than expected levels of winter stock.

Sales of fashion and accessories slumped 20.2 per cent in the week after the budget, according to BDO's Australian Retail Index, while total retail sales fell 5.1 per cent.

9:04am:US manufacturing expanded in May at the fastest pace this year as American assembly-line workers responded to increased orders by cranking up production.

The Institute for Supply Management's factory index rose to 55.4 from the prior month's 54.9. Readings above 50 indicate expansion. The release of the data, watched closely by financial markets as a gauge of the economy's strength, was anything but smooth.

Twice the Tempe, Arizona-based group had to amend its figures due to calculation errors.

Factories are helping spur a second-quarter economic rebound after a slowdown in inventory-building led to the first contraction in three years. Sustained demand from consumers, combined with corporate orders for machinery and equipment, are helping propel sales at companies such as Cisco Systems.

"The case for better growth is very good," said Ethan Harris, co-head of global economics research at Bank of America in New York, who projected a reading of 55.5. "We're kind of at the point where the economy should really have a chance to pick up speed."

The Standard & Poor's 500 Index and Dow Jones Industrial Average rose to records, erasing earlier losses after the ISM's corrections. The S&P 500 climbed 0.1 percent to 1,924.97 at the close in New York. The Dow advanced 0.2 percent to 16,743.63.

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Featured comment:

I was listening to a US commentator this morning, and he said that there was an expectation that the Feb would stop the taper and increase QE, if data disappointed. So that means the market can only go up because markets can rally on both good and bad news. I'm not confident the Fed knows what sort of mess it's creating, interesting times.

Commenter

Grizzly Adams

Location

Date and time

June 03, 2014, 10:41AM

Sort comments by:

LOL there are a lot of confused property perma bulls on here desperately trying to talk up house prices and anyone who disagrees is doom and gloom.

A property price bust would be the best thing that could happen to this country. There's 2 trillion dollars tied up in residential property that would be better used in wealth generating enterprises.

That is real wealth from productivity and innovation. Not lazy, rent seeking wealth from sitting on property and try to talk it up.

Commenter

Allan

Location

Prahran

Date and time

June 03, 2014, 4:21PM

"That's why house prices have been flat for four years."

You said they have been increasing ABOVE the rate of inflation earlier here today. Which is it???

Commenter

Irish Phil

Location

Date and time

June 03, 2014, 4:29PM

The only desperate person is the one who posts 30 - 40 comments a day about the same thing. Simple really.

Commenter

Hugo

Location

Date and time

June 03, 2014, 4:30PM

I know I've mentioned this before, but I cannot understand why, with a TRILLION bucks in QE annually, that inflation in the US didn't even...BURP! Something else is going on man. I'm telling you! GG.

Commenter

Gordon Gekko

Location

Greg Coffey World

Date and time

June 03, 2014, 4:21PM

Afternoon reflection from this mornings refraction...UXC boosted volume which is encouraging...the price moved up marginally [3%]...the yield still looks promising.ok i'll hold for now.

Commenter

BearshapedBull

Location

Longshots Lounge

Date and time

June 03, 2014, 3:32PM

Just curious if anyone has any thoughts on OFX (OxForex Group) and whether a buy at current levels?? Thank you,

Commenter

Beck

Location

Date and time

June 03, 2014, 3:14PM

OZForex is an ex Private Equity IPO - stay away, it is typical to pump up revenues and chop costs on the way into a float and so the businesses usually need heavy investment in the first few years to get back on a normal business curve.

Commenter

GK

Location

Date and time

June 03, 2014, 3:53PM

The Aussie market bounces up and hits 5500 fifty times then bounces back down but when we're coming back through 5500 it only takes one go. How does that work ?

Commenter

Bulldog

Location

Sydney

Date and time

June 03, 2014, 2:57PM

if you were watching closely it wasn't just one go, today is a typical late sell off on such a benign day, chance to snap up a bargain for a quick profit tomorrow

Commenter

cyril

Location

Date and time

June 03, 2014, 3:37PM

comment at 2.39pm, he said strangely, not worryingly, thats what we call a "Chinese whisper"

I will stay with strangely thanks, no need to worry unnecessarily lol

Commenter

dewf hart

Location

Date and time

June 03, 2014, 2:48PM

Low volatility means the market is not worried. So is the RBA is worried that the market is not worried? Perhaps the market is like my wife, when she says “I’m not worried”, I reply, “Oh, no! We’ll have to see a doctor to find out what’s wrong”.

Commenter

Engineer

Location

Scam City

Date and time

June 03, 2014, 3:01PM

Glenn Stevens will see it my way one day, need to get the Aussie down Guv...cut the cash rate!

Commenter

Xenaphon

Location

Date and time

June 03, 2014, 2:35PM

...."shows almost all the net credit growth since 2012 has flowed into property"....

Yeah...Just need somewhere to house the consumers...We can go on like this indefinitely.

Commenter

JohnBB

Location

Date and time

June 03, 2014, 2:11PM

hmmm top up on MSB or PRY cant decide...or both/or neither...wheres that dartboard.

Commenter

BearshapedBull

Location

Procrastination Lounge

Date and time

June 03, 2014, 2:07PM

"Customers of NAB bank have been left potentially out of pocket as a technical glitch has resulted in double charging for some credit card transactions."

More than a decade of "down sizing", "right sizing", "off-shoring", "voluntary redundancies" and lazily doling out most of their loan book to littlelandlords and you're left with a bank that has had a string of basic IT failures.

Basket case.

Commenter

Allan

Location

Prahran

Date and time

June 03, 2014, 2:02PM

It is obvious to most of us that the Chinese are manipulating the price of iron ore at the moment and this will be very short term;

The trend will reverse as early as this month and there will be some quick money to be made.

Make sure you have some cash for you favourite miner, BCI for me!

Commenter

craig

Location

Date and time

June 03, 2014, 2:00PM

Sure, nothing to do with massive new supply and massive stockpiles.

Iron ore is not rare you know.

Commenter

Allan

Location

Prahran

Date and time

June 03, 2014, 2:04PM

Iron ore futures falling like a lump of red rock ….

China’s National Development and Reform Commission (NDRC) is talking down the outlook for iron ore price. I wonder why? The worst thing is that our media accepts the spin without question and the negative media blitz is working.

Last year, when the price was moving up, China claimed the big three miners were manipulating the market to push prices higher after a shipment was diverted to higher paying customer. Their suspicions reflect their own market ethics and behaviour. The current market manipulation is probably about more than just a single supply contract, it would be about trying to force down the share price of heavily indebted miners that can then turn to guess where for some equity finance.

It is market manipulation on a such a grand scale that ASIC is completely impotent to do anything about it.

Commenter

Engineer

Location

Scam City

Date and time

June 03, 2014, 2:25PM

the proof of the pudding will be in the eating, but @ Engineer seems to understand where I am coming from;

The Chinese are clever operators, lose sight of that fact at your own peril!

Commenter

craig

Location

Date and time

June 03, 2014, 3:09PM

its called capitalism folks.the usa does it every day. look at apple pr gmh or ford. look at german car makers charging australia double.china got on board and started playing the game now people are whining. suck it up folks. you asked for capitalism and you got it. a race to the bottom. there can be only one.

Commenter

smilingjack

Location

Date and time

June 03, 2014, 4:21PM

"NAB new customers zero per cent interest on new purchases for the next year."

SWEET! Sign me up! :)

(and yes I have the cash to pay for it later) 0% in the meantime ;)

Commenter

GS

Location

Date and time

June 03, 2014, 1:55PM

blogger Allan really cracks me up spruiking doom and gloom, not sure if he realises or not the market is bullish and has been for a long time and all he does is post shorts or add to shorts.

if the shorts you are posting are real you would be feeling a lot of pain at the moment not to mention the long on SBM

too funny

Commenter

dewf hart

Location

Date and time

June 03, 2014, 1:54PM

@dewf hart...Bullish? It's been stuck below 5500 for how long now? The big, massive, huge dividend plays that got it there are now paying 5%...Stop kidding yourself.

Commenter

JohnBB

Location

Date and time

June 03, 2014, 2:16PM

@JohnBB this time last year it was 4737, pretty bullish to me lol

Commenter

dewf hart

Location

Date and time

June 03, 2014, 2:56PM

@JohnBB, if you are not making trading this latest run up then you will never make money and by definition you are incorrect, it is actually a bull market!

Commenter

craig

Location

Date and time

June 03, 2014, 3:22PM

And 30% below 7 years ago. Yeah real bullish. LOL.

Commenter

Allan

Location

Prahran

Date and time

June 03, 2014, 4:10PM

@118pm commentcredit boom!its all ok we can swap $$debt for nicks and give ourselves another year to make up the slack.where do i sign

Commenter

BearshapedBull

Location

Longshots Lounge

Date and time

June 03, 2014, 1:53PM

In response to Allan: "SYDNEY is still in a bubble because a decade ago they were at bubble prices and haven't deflated yet."

They have moved sideways as you love to point out over the last 10 years. As that is not keeping up with inflation it was in fact a nice steady 10 year deflation of the bubble.Your argument is wrong, but your point is actually correct. Prices in SOME areas are unsustainable at current levels.

Commenter

Irish Phil

Location

Date and time

June 03, 2014, 1:46PM

Nope. It is just above inflation so no, not wrong.

Commenter

Allan

Location

Prahran

Date and time

June 03, 2014, 2:06PM

Allan, with his odd contradictory line again. If Sydney property price growth is just above inflation, and has been for 10-20 years, and wealth and incomes have grown, and unemployment has remained low, and housing supply has not kept up with population increase, it is in any commonsense analysis, not a bubble. On the contrary it's very sustainable while these factors remain.

Commenter

guy

Location

Pymble

Date and time

June 03, 2014, 3:36PM

Ah, so property returns ARE beating inflation??

Commenter

Irish Phil

Location

Date and time

June 03, 2014, 3:52PM

Bubble deniers will always be bubble deniers.

Face it is hasn't burst yet and nobody knows when

Commenter

Me Me Me

Location

Date and time

June 03, 2014, 1:46PM

Or, more importantly, if.

Commenter

Groucho

Location

Date and time

June 03, 2014, 2:11PM

Bubble supporters will be supporters. Why are unsustainable price rises called 'bubbles'? Because, like real bubbles, they are fragile and have a very short life. Opposite to the Australian property market, in other words.

Commenter

beria

Location

Date and time

June 03, 2014, 2:18PM

"And the last bit of economic data today, the current account deficit almost halved ......showing underlying strength across the economy."

is this good news or bad news to the negative nancies? .... just sayin' don't get mad. feel free to bite below. thanks for playin'. ROFLMAO do se do around we go.

Commenter

Big

Location

Dog

Date and time

June 03, 2014, 1:44PM

It's in the red and it will stay in the read for the next decade.

Housing boom!

Commenter

Allan

Location

Prahran

Date and time

June 03, 2014, 4:11PM

ACR that was catching a falling knife...think i'll keep it as AConstant Reminderfailed trade strategy in @ 1.38 out at 1.21 in @ 1.03 now 85c......shizenhausen.

Commenter

BearshapedBull

Location

Longshots Lounge

Date and time

June 03, 2014, 1:44PM

NAB's "zero per cent interest on new purchases for the next year" is the scariest thing I have read in a long time. I'm stunned. Buy JBH folks - the bogans are coming and they're 'rich'!

Commenter

Gareth

Location

Sydney

Date and time

June 03, 2014, 1:43PM

just a quick one. all these people that are snarly about current ASX levels, US debt levels and property prices. your posts reek of desperation, sadness and failed dreams. to everyone else out there happy trading, dont let the negative nancies get you down!

Commenter

chin

Location

up

Date and time

June 03, 2014, 1:41PM

Sort of missing the point. I'm not talking about where our nation's super money COULD be, I'm talking about where it IS. It IS in fixed allocation funds for the most part. These funds might have 60% Oz stocks, 35% overseas and 5% cash. These funds can not vary that allocation for any reason. So every month these funds receive many more millions in employee contributions that they HAVE to invest in the stock market. The can choose the stock but they can't chose not to invest it.So while individual investors might be thinking the market is overpriced. We have the massive institutions with no options but to keep shoveling in money. ($4+ trillion over the next decade). It seems to me that is quite enough stimulus to keep the Oz stock market going strong for a long time yet.

Commenter

Peter

Location

Oz

Date and time

June 03, 2014, 1:39PM

Taking scruples out of the equation for a moment, if you were responsible for investing someone else's money and your bonus was tied to their success, wouldn't you be completely ignoring the risk and going for the biggest gains possible despite knowing that it's all going to collapse soon? If instead you acted responsibly and were only getting them a risk-mitigated 10% pa rather than 20% pa like everyone else, wouldn't you lose your customers (and your bonus)? What do you care when it all collapses? You've been getting well paid and lost nothing when it does. So as long as the world allows others to invest on their behalf, and pays them to do it, how can it operate any other way? Maybe that explains the ongoing irrationality in the markets as they demonstrate zero fear of an impending collapse.

Commenter

Gareth

Location

Sydney

Date and time

June 03, 2014, 1:29PM

"Some good China data, and up we go again!"

LOL

Ross Garnault has already told you, the "salad days" for Australia when it could gouge bonanza prices for resource are over.

"Professor Garnaut predicted the rise of China, but is now warning Australians to prepare for a serious decline in living standards as the resources boom gives way to falling export prices and a slump in the development of mines. "

http://www.abc.net.au/lateline/content/2012/s3601577.htm

Commenter

Allan

Location

Prahran

Date and time

June 03, 2014, 1:20PM

The expression "serious decline in living standards" was made by the ABC presentor, not Prof Garnaut.

Garnaut has argued exactly what many others have in that the boom is over but mining will still continue above historical levels.

His actual view is that Oz will need to produce more (not just mining but other businesses including construction) to maintain our living standards and that we will all need to tighten our belts, partially due to all the Liberal Party middle class tax cuts of the mid 2000's!!

Commenter

Life Is Good

Location

The Real World

Date and time

June 03, 2014, 4:04PM

"Oh dear property perma bulls in a tiz. If you're so sure about your investment why do you get upset so easily?"

Urrrrr no, Person A tells person B they will get cancer 30 times a day in front of person C. Person C isn't up set, person C is just disgusted by person A's actions. Person C = the majority of reader on this blog.

Yesterday I pointed to the auction clearance rate from Feb/March as having indicated home prices were due for moderation. In reply a couple of people claimed that the auction clearance rate was an unreliable measure because some homes are offered for auction, then withdrawn from sale yet not recorded as passed in. This I think displays a common misunderstanding of how economic indicators work.

An economic measurement like unemployment, auction clearance or GDP are not like measuring a temperature or a length. It is fully accepted that these numbers cannot completely describe what is an extremely complex underlying situation. It is merely a yardstick for getting a handle on them. Often people claim that “real unemployment is x%” because the 1 hour a week threshold is too low and doesn’t reflect the number of people who are unable to find enough work to support themselves. But that is NOT what the unemployment number is intended to measure. The number itself is not really important. What matters is TREND BEHAVIOR and consistent methodology so that we can be certain that a change in the number represents a change in conditions and not just a change in method.

It is fully accepted that the number itself is flawed, but so long as the flaws are consistent that is ok. We simply have to draw the lines and work with what we have.

Commenter

Jimmy

Location

Date and time

June 03, 2014, 1:00PM

"TWELVE months after the Reserve Bank of Australia issued a warning about a potential apartment glut in Melbourne’s CBD, signs are emerging the market is bloated with empty apartments."

I know! Let's build some more!

Housing boom!

Commenter

Allan

Location

Prahran

Date and time

June 03, 2014, 12:40PM

Are they building more??I thought you said yesterday that building approvals are down??

Commenter

Irish Phil

Location

Date and time

June 03, 2014, 1:36PM

Hey Al you got a zen garden to go to at the end of the day...seem to be whipping yourself into a bit of a frenzy today mate?

Commenter

BearshapedBull

Location

Longshots Lounge

Date and time

June 03, 2014, 1:39PM

have to agree with you @BSBit seems the same to meAllan says housing boombut his mantra is doom and gloomshort that, short thisjust seems like hit and missmarket is on a runwhy not join the fun!

Commenter

cyril

Location

Date and time

June 03, 2014, 2:19PM

Only littlelandlords think that getting a tax deduction for a depreciating asset is positive cash flow. LOL.

Commenter

Allan

Location

Prahran

Date and time

June 03, 2014, 12:18PM

And only the most myopic property bears think of propery as a depreciating asset.

Commenter

alto

Location

Date and time

June 03, 2014, 12:40PM

Your buildings don't depreciate. They're special.

Commenter

Allan

Location

Prahran

Date and time

June 03, 2014, 12:47PM

@Alto

*Gross generalization warning*

Land goes up in value. Buildings come down.

Commenter

Jimmy

Location

Date and time

June 03, 2014, 1:02PM

The building will depreciate, but the 'rarity' will(?) appreciate. Rarity being the land, or position of the building.

Commenter

Fly

Location

On the wall

Date and time

June 03, 2014, 1:07PM

Depreciation is deferred expenditure. The benefit is that you may not have to pay for the New Building for a long time ahead.

Commenter

DaKlingons

Location

NZ

Date and time

June 03, 2014, 1:08PM

But Allan, it is a positive cash flow. That you don't like people investing in houses doesn't change the meaning of the words "positive cash flow".

Yes, said "littlelandlord" has to have a negative cash flow 364 days a year to generate their weak and once a year positive cash flow on the day they get their tax return. But the net effect over a year can still be positive.

Whether this is a net negative for their overall wealth depends on the balance of the depreciation rate of buildings against the appreciation rate of land.

We get that you don't like "littlelandlords" (which I assume just means people who invest in property for a tax loss because they don't know better, rather than it being a reflection of a preference for concentrated ownership of land, ie "biglandlords"), but that doesn't mean you can redefine English and mathematics to suit your predispostions.

Owning lots of land is common to one very particular group of people: the very, very rich**. I wonder why?

**I assume "littlelandlords" rarely fall into this category.

Commenter

Huh?

Location

Date and time

June 03, 2014, 1:49PM

Yep all those Lords in England sitting on great swathes of property that they didn't earn I my heroes.

Commenter

Allan

Location

Prahran

Date and time

June 03, 2014, 2:13PM

I'm not sure what being your hero has to do with anything.

Land, as a rare**, appreciating, indestructible and in almost all cases massively under-taxed asset, is inherently attractive to people who have, or who would like to have, significant wealth.

Besides which, stating your opposition to the English landed gentry (who'd have thought it?) doesn't get away from the problem in your original comment - positive cash flows from negatively geared property are possible.

Not common, I'll give you, but technically possible.

**rare as in useful and conveniently located - there's plenty of land, but the middle of the Simpson desert is not the same as, say, Sydney's north shore or the Darling Downs.

Commenter

Huh?

Location

Date and time

June 03, 2014, 3:02PM

Land? What's land got to do with it? Floor space is made out of thin air and there is a floor space glut.

Commenter

Allan

Location

Prahran

Date and time

June 03, 2014, 4:15PM

The RBA may keep rates on hold today but I just got a notice from Rabobank that they are dropping their deposit rates by between 0.20% and 0.25%.

Commenter

mitch of ACT

Location

Date and time

June 03, 2014, 12:05PM

pushing even more people out of cash and into shares or in the case of a lot of smsf's - property.nice.arent we in the process of deregulating the financial sector making it a free for all for cowboys everywhere to flog the new wave of cdo's to he uninformed or plain stupid?

Commenter

smilingjack

Location

Date and time

June 03, 2014, 12:45PM

The ATO has other ideas about SMSFs going into property. http://www.afr.com/p/business/financial_services/tax_office_targets_smsf_property_hz3jo6PgrY5QQKXxyRzHcN

Commenter

mitch of ACT

Location

Date and time

June 03, 2014, 1:01PM

Be careful tho. Losing the "alleged" 1-2% in cash (due to inflation) is probably better than entering into a stock market that is grossly overvalued and losing 15-30% on face value capital/equity when trying to capture a return of say 5-7%....

Commenter

Bye Bye Fiat Money

Location

Date and time

June 03, 2014, 1:47PM

Isn't it funny how at the end of the last bull run we could get term deposits for consumers @ 7% now we are coming to the end of another bull run and we can barely get 4%. Where do we go when the share market goes pop? Housing boom?

Commenter

DR

Location

syd

Date and time

June 03, 2014, 1:58PM

Have a look at this chart of the obvious bubble in property prices:

http://www.whocrashedtheeconomy.com/realhouseprices1880to2012.png

See the sideways bit at the top? According to bubble deniers that's proof there is no bubble. ROFLMAO!

Commenter

Allan

Location

Prahran

Date and time

June 03, 2014, 11:56AM

Yup.

If you owned property between 1995 and 2009 (ish) you did very well. If you missed that window you missed out.

Simple as that.

Commenter

Jimmy

Location

Date and time

June 03, 2014, 1:12PM

Oh dear property perma bulls in a tiz. If you're so sure about your investment why do you get upset so easily?

Oh and "pass the red" I likes you better when you were posting as "unbalanced". At least you had a sense of humour then. LOL.

Commenter

Allan

Location

Prahran

Date and time

June 03, 2014, 11:53AM

I'm not convinced there are (m)any perma housing bulls here. I am certainly bearish over the next 5 years.

Commenter

Irish Phil

Location

Date and time

June 03, 2014, 12:16PM

Irish Phil gave this yesterday to clarify negative gearing and ‘cash flow positive’.

The calculations are correct and close to what you'd expect for a 500k-1m property. However, there is a significant point that these numbers hide. If you assume in round numbers 4% rental, a 5.5% interest and 1% expenses, the implication is that the loan can be no more than 50% of the property value. Not exactly an easy entry for investment.

Not only that, it is a very tight squeeze to get this to work. A change in interest rates, unoccupied tenancy, unforeseen maintenance, even the deprecation schedule could derail this idea. In the end. the 'cash flow' is not going to exceed ~0.5% and will only be a benefit based on your tax rate. At 38.5% tax rate, 0.5 drops to about 0.2% of the property value.

Commenter

Calculator

Location

Date and time

June 03, 2014, 11:50AM

Spot on Calculator.

I have not bought property in the last 3 years, it just doesn't make sense at current levels.If investors really are still buying then I don't know how they justify if from an accounting point of view.The numbers I used yesterday that you quoted were just for illustration purposed by the way.

Commenter

Irish Phil

Location

Date and time

June 03, 2014, 12:09PM

depends what property your buying?plus you can haggle on property. as soon as things start coming undone I will be hoovering up everything I can nearby.

Commenter

smilingjack

Location

Date and time

June 03, 2014, 12:49PM

@calculator & Irish Phil Ageed too. SMSF action is seemingly driving up prices in some areas to make the sums unsustainable for Investment. Really have to pick your mark. And these SMSFs have to pay a much higher interest rate also...

Commenter

Prince Eugen

Location

Date and time

June 03, 2014, 1:03PM

hehe @smilingjack, i doubt you'll be hovering anything up, if you can't make money in today's environment, then you never will. see i bought a place in waterloo in 2006 before the GFC i was told everything would crash. 3x2 for 550K off plan, i even thought price was ridiculous. but i wanted to live in it and decided to go with heart over brain and advice from conservatives, now its worth absolute minimum 800k, most 1 bedders go for close to 500k in my area. funny think is as the GFC set in everyone kept calling for blood, that it still wasnt the right time to get back in, this went on through 2009, come 2010 talk of double dip GFC, still bonkers if you buy ect..... these doomsayers never stop to smell the roses you see, they are destined to be negative therefore, they naturally attract bad choices, life partners, friends, their brains ooze sadness and doom, they die young, they cant socialize ect... it really is a sad sad way to live. only one thing worse that having a successful cocky young bloke at a party.... a miserable old bastard!

Keep hanging your hat on those short term things, Allan. Like most property investors I'm sitting in for the long haul, and selling when prices are good - as I did in April. BTW I sold to someone who has no faith in the 30-40% price fall predictions of some like yourself. I could've allowed you to panic me into selling 4-5 years ago, but called you wrong then, as I still do. I would've been much worse off if I believed you and acted. But thanks for the invaluable advice. And I do mean invaluable.

Commenter

guy

Location

Pymble

Date and time

June 03, 2014, 2:35PM

Prices have been flat in real terms for 4 years so no not wrong at all. You sold because the 1.5% return was woeful when you could have bought CBA shares and made 75%.

Commenter

Allan

Location

Prahran

Date and time

June 03, 2014, 4:04PM

I'm getting ready to rope a dope again. ASX 200 gets drunk and falls over every time it gets to 5530. Been a nice little trade selling there.

Commenter

Ridgy

Location

Date and time

June 03, 2014, 11:41AM

China is growing, US is growing, Europe is recovering so why all the doom and gloom?

Commenter

craig

Location

Date and time

June 03, 2014, 11:38AM

Memories of the GFC. This means that any bit of bad news invokes a rapid kneejerk response. It takes a run of good news to push markets up.

Commenter

Wally

Location

Flynn

Date and time

June 03, 2014, 12:33PM

One question is whether the growth is real or debt driven.Growth from prouctivity gains or employing more people productively much better than growth thru borrowing. I think that China and US are more debt than real at the moment. It may work and kick start real growth, or it may fail and cause a big hangover as the debt needs ot be repaid (or deflated).

Commenter

DaKlingons

Location

NZ

Date and time

June 03, 2014, 1:26PM

"China's services sector grew at its fastest pace in six months in May"

Good for China's 500M rural poor and the environment. Not good for iron ore/coal/Australia.

Commenter

Allan

Location

Prahran

Date and time

June 03, 2014, 11:33AM

Good for investment into Australian property though.

Housing boom?

Commenter

Irish Phil

Location

Date and time

June 03, 2014, 11:44AM

I am tipping a rate cut of 25 basis points today!

Commenter

Xenaphon

Location

Date and time

June 03, 2014, 11:32AM

a smidge premature but hey..............you never know.I think they will keep their powder dry until they know things are really tanking. about 4 weeks before we will find out.maybe next meeting.a simple but clear picture of what is happening. how quickly $14 became $17 nearly $18.very extraordinary circumstances

https://www.youtube.com/watch?v=1XJnJlDrcAM

Commenter

smilingjack

Location

Date and time

June 03, 2014, 11:53AM

flat i reckon

Commenter

mushy

Location

dark

Date and time

June 03, 2014, 11:59AM

@ X. Don't let your bleak view of the world cloud your judgement. There is no way they will cut rates today.

Commenter

Wally

Location

Flynn

Date and time

June 03, 2014, 12:35PM

You'd be the only one in Australia

Commenter

Goldfinger

Location

Sydney

Date and time

June 03, 2014, 12:35PM

Another bounce off 5500. This market is showing some real resilience.You'd worry if it breaks through and heads for 5400.

Commenter

Irish Phil

Location

Date and time

June 03, 2014, 11:22AM

Yes been watching it as well. I am thinking that unless some news comes in today's range maybe 5500 - 5520

Commenter

cyril

Location

Date and time

June 03, 2014, 11:30AM

Yes been watching it as well. I am thinking that unless some news comes in today's range maybe 5500 - 5520

Commenter

cyril

Location

Date and time

June 03, 2014, 11:30AM

Some good China data, and up we go again!

Commenter

Irish Phil

Location

Date and time

June 03, 2014, 11:40AM

Pollyannas plum out of puff. Alliteration is fun.

Commenter

Allan

Location

Prahran

Date and time

June 03, 2014, 12:22PM

This Pollyanna will take 5500 over 3400 any day of the week

Commenter

polly & anna

Location

Date and time

June 03, 2014, 1:49PM

You can take 3400, I'll take $4.90/share from shorting FMG. Ta.

Commenter

Allan

Location

Prahran

Date and time

June 03, 2014, 2:15PM

no it was 2800pts that Allan predicted

Commenter

Big

Location

Dog

Date and time

June 03, 2014, 2:17PM

The market regularly crashes by 50%. What's 50% of 5500?

Commenter

Allan

Location

Prahran

Date and time

June 03, 2014, 3:58PM

IMHO , given what Ive read re: amount of money gone into housing , the fact its the biggest liability on banks books ,its a wealth creation tool of the rich , do you really think the vested interests will let the housing bubble "pop". I think not . There's too much at stake to allow it to go down substantially . You can see the man made mechanisms in place supporting prices - immigration , smsf access to property , negative gearing ,low int rates ( yes I know they will prob go up sooner rather than later) , not eneough new building approvals, 457 visa immigrants etc , foreign purchasers .To me this is the system ensuring theres always demand . So unless you think unemployment is going to become a huge problem ,or spiralling interest rates , I wouldnt be waiting for the bubble to pop . Besides that , weve been brought up beliveing the aussie dream is to own a house, so no , I dont beleive we'll see a dramatic decrease in house prices , maybe a stagnation , but a real big decline ? no. One query though when I read people belittling tiny yeilds , which yes increases costs of holding said asset , but Ive always been taught its about controlling the asset ...........yes im expecting the share believers to go on about fully franked yeilds etc but....your shares can go down 30%+ or more in a finacnial crisis......you deserve a higher return even though you think your in a safe stock. Bring on the replies !

Commenter

PeterGriffin

Location

Date and time

June 03, 2014, 11:20AM

you know this thread is predominately for the sharemarket type? but i agree with most of your points.

Commenter

Brian

Location

the dog.

Date and time

June 03, 2014, 11:26AM

@PeterGriffin...Agree...The conservatives are in power with left wing liars in opposition....

There is no opposition. There is simply different angles, while the outcomes are exactly the same. More people, all policies aim at higher prices...NIMBY while populating. Non owning, less wealthy Australians are being sacrificed by all politicians, not just LNP.

Commenter

JohnBB

Location

Date and time

June 03, 2014, 11:37AM

@PeterGriffinTotally agree with you. The people in power and rich are reaping bewnefits of this but they are not in the majority. Whole thing boils down to "destroy country to keep the house prices up and satisfy the greed of few". How long this is going to work?

Commenter

xyz

Location

Date and time

June 03, 2014, 12:29PM

QAN sneaking UP.Is that because AL has gone MIA which resulted in less reports of DOOM & GLOOM for the Flying Kanagroo?If that is true, QAN shares will SKYROCKET if AL departs permanently!

Commenter

PLEASE EXPLAIN?

Location

Date and time

June 03, 2014, 11:19AM

What are all these lies from The US and Australia re carbon emissions? We're/they're going to reduce while populating? What a joke.

Commenter

JohnBB

Location

Date and time

June 03, 2014, 10:54AM

Population of Africa is 1 billion. In 100 years it will be 4 billion. Most will wish to emigrate.

Commenter

Wally

Location

Flynn

Date and time

June 03, 2014, 11:04AM

exactly.the alberta tar sands is the biggest man made pollution event in the history of the world. whilst they are at they will destroy millions of acres of pristine wilderness.'merica the country that introduced tax deductions for the more emissions your car produced and more fuel it consumed. it should be obvious by now to anyone with half a brain that fairfax is a paid for advomercial site for usa government.

Commenter

smilingjack

Location

Date and time

June 03, 2014, 11:04AM

This has always struck me too.

If you increase energy (or water, or whatever) efficiency by say 10% and the population increases by 20%, you're still going backwards.

The world cannot sustain the current out of control population growth rates. Yes, many developed economies now have low birth rates, but mass migration from the exponentially increasing population of the third world to those countries (Japan aside) means low birthrates in the developed world mean nothing

Commenter

Fred

Location

Date and time

June 03, 2014, 11:07AM

Nah its all lies so that Billionaires can invest in wind farms and get money from the taxpayers for providing renewable energy .

Commenter

JimmyJ

Location

Date and time

June 03, 2014, 11:26AM

But there is no contradiction between immigration and the trumped up global warming scare. The "carbon footprint" scare - just like the "population bomb-scare" in the 70s - is just a way of scaring Western people into having less children. The ultimate goal is also achieved through mass-immigration. The two phenomenons complement each other.

Commenter

Dr No

Location

Sydney

Date and time

June 03, 2014, 11:30AM

The US appears to have gone through some strategic long term thinking on energy. They have moved to stock pile up to a years worth of fuel supplies. They're developing their energy resources (fraking) and the third arm is the green side. Leaving C02 and global warming aside, it reduces dependency on other fuel sources. It will also be a major aspect of the future economy (unfortunately Oz has discarded our chance to get in while the cost of abatement is cheap). We'll pay a lot more down the road.

Commenter

Peter

Location

Oz

Date and time

June 03, 2014, 11:39AM

I have a put option on SYD (code is SYDTH9), that expires on the 26th of June.Strike price is 4.26. It looks like SYD is going ex-dividend on 26th of June too.

RIght now my option is out of the money. What should I do?

Commenter

James

Location

Sydney

Date and time

June 03, 2014, 10:54AM

Get out while you still have some money left....Put's are very difficult because the spread will kill you...If you're going to short, do it properly.

Commenter

JohnBB

Location

Date and time

June 03, 2014, 11:11AM

Assuming you are long the put, one strategy could be to sell a put for the same amount of contracts at a lower strike. Receive some premium. If the price goes through both strikes at expiry you will lock in the diff between the strikes plus premium minus premium paid for your long put. Worst case scenario is if the price ends up higher than your strike, then you will lose or make the difference between the premiums paid and received.

Commenter

Ridgy

Location

Date and time

June 03, 2014, 11:29AM

Geniune question: How do I short properly? Using CFDs?

Commenter

James

Location

Date and time

June 03, 2014, 11:36AM

@James: I guess you could short a REIT?

Commenter

Irish Phil

Location

Date and time

June 03, 2014, 11:38AM

Thanks Ridgy, that was very helpful!

Commenter

James

Location

Date and time

June 03, 2014, 11:45AM

@James...I don't know how to use those new fandangle CFD's...I stopped looking when I worked out their leverage is off the scale....It's easy enough to lose lots of money without leverage...Shorting, you're already going against the natural flow of shares (up)...Why not just call a broker and short the old fashioned way? Did you have the joys of going through the GFC? It hurts and you never ever forget the lessons.....

Commenter

JohnBB

Location

Date and time

June 03, 2014, 11:45AM

James, the answer to 'How do I short properly? Using CFDs?' is long and I reckon a lot of the guys here could answer it, but they neither have the space nor probably the time and inclination to do it. Respect for Ridgy for such a good response to your first question, but your last question really should go into Google instead.

Commenter

Gareth

Location

Sydney

Date and time

June 03, 2014, 11:53AM

@smilingjack "thats right. money that is forcibly removed from you ( by our democratic society ) and given to people who then pay themselves 10's of millions $$ per year. then once all that is in place they tell you you cant touch it until your 60 - no make that 62 no wait 65 and on and on."....

Couldn't have said it better....Yep, welcome to Straya where no matter who we vote for we end up with idiot part A or B....Democracy in this country is a joke. I've got it in writing my preservation age is 60, and that's when I want my money. I don't care who's bribed, oops sorry, donated to who. ^0 is what we agreed to, and that's when I'm expecting it. That shouldn't change.

Commenter

JohnBB

Location

Date and time

June 03, 2014, 10:48AM

Stop your whining. Super is paid by employers in addition to your salary. Stop acting like it is an entitlement, by @Smilingjack saying that it is forcibly removed is assuming it was in your base pay to begin with.

Commenter

MLJ

Location

Date and time

June 03, 2014, 11:24AM

@MLJ...Quite an assumption...I've put fa5r more in than any employer has and I've also managed it myself...I SACRIFICED using that money so I could have it when we agreed I'd have it..At 60. Your criticism is not valid. It's my money, even if my employer put it there, designed by Keating for me to use from 60 in lieu of me getting a higher wage.

Commenter

JohnBB

Location

Date and time

June 03, 2014, 11:50AM

You have been warned!!!!

Eerily reminiscent' of pre-GFC conditions

A storm alert today from Simon Derrick at the Bank of New York Mellon. He cites three warnings from leading central bankers, all alarmed by the remarkable disregard for risk in the equity, credit, and currency markets.

Commenter

dunno

Location

Date and time

June 03, 2014, 10:44AM

I agree, my research shows every major crash since 1929 has been predicted by annonomous comments on blogs. Thats why I listen to them all

Commenter

Wwwish Lion

Location

Melbourne

Date and time

June 03, 2014, 11:16AM

There was no printing before the GFC...It's not going to happen. Never again now they've discovered this magic....FK where it's going but I can't see a big fall without more intervention. Scary stuff.

Commenter

JohnBB

Location

Date and time

June 03, 2014, 11:25AM

Can anyone explain what 'Bubble Boy' (Allan) means by his continual reference to Housing Boom. If I have to read it 35 times a day, I would like to understand it!

Commenter

Gumly

Location

Mackay

Date and time

June 03, 2014, 10:43AM

I would also.I'm still not sure if he means there IS a housing boom, there will be one, or those who say there is one are wrong?

Commenter

Irish Phil

Location

Date and time

June 03, 2014, 11:04AM

It is a simple but clever play on words.He means that housing (prices) are set to explode (drop like a stone).

I think he should go with:

Housing ...... BOOM!

Commenter

Life Is Good

Location

The Real World

Date and time

June 03, 2014, 11:10AM

Allan's view of an imminent housing price crash seems to be based on an ethical assessment of what should happen to the housing market, perhaps a underlying guilt at having benefited from the past boom and not a small dose of schadenfreude.He's happy to pinch any figure that supports his hypothesis and write Housing Boom! under it. Truth be told he could have started posting his dire predictions a decade ago and we'd obviously all still be waiting for the BOOM. Maybe next year...?

Commenter

Peter

Location

Oz

Date and time

June 03, 2014, 11:32AM

yeah i have been wondering that also. does it mean there is a boom? or is it sarcasm? sometimes it doesnt match his comment either. another question is he happy about it or something?

Commenter

confused

Location

also

Date and time

June 03, 2014, 11:33AM

He has been saying that for a long time.Reminds me of the saying:"That economist has predicted 10 of the last 3 recessions". :)

Commenter

Irish Phil

Location

Date and time

June 03, 2014, 11:33AM

He's being sarcastic of course, and I'm told he has been talking about a housing crash for years.

He is mostly correct. We've all been watching the house of cards building for years and all sensible people have been saying 'this can't go any higher' yet year after year it keeps going. The even more sensible people have noticed that the reason it hasn't fallen is because every so often someone comes along and puts a dab of super glue here and there and stabilises it so it keeps going much higher than an unsupported house could have. Some of us wonder how it got so high (because we didn't notice the gluing), some of us noticed the gluing but wondered how strong it was and whether the gluing would continue, and some of us (the mum & dad investors) saw nothing but some object that just keeps getting bigger, and they don't have the common understanding to realise that it is defying physics.

The result of this has been the sensible people sitting on the sidelines scratching their heads and even feeling a little sorry for themselves for missing out on the fortunes that the uninformed stumbled into entirely through their blind ignorance.

Allan knows it's a house of cards, he also knows it's held together with glue. Sensibly, he expects it to collapse soon whereupon he will pickup a handful of scattered cards and build a smaller more stable house of his own. What he doesn't know is how much longer someone will keep dabbing glue on it. What the investors don't know is that the size of the sneeze required to overcome the glue is getting smaller every day...and we're running out of glue...

this also confuses me. we come out of 08 crisis, how come people are so certain we are heading straight back into one? seems to defy the law of economics. i mean confidence is low, people are saving getting ahead on there mortgages and interest levels are low. Don't we have to wait for inflation to run away? And also on average these recessions last 1-2 years, most people ride this out. its almost like they want it to crash, theres no analysis that goes with it, its just what they want. and we dont always get what we want now do we?

Commenter

confused

Location

also

Date and time

June 03, 2014, 11:49AM

@ Allan: I agree prices are crazy high, but defaults are tiny. People are coping.I can only conclude the those buying in the last few years are extremely well off and can stand the level of repayment, or are buying for cash.Either way, a rise in unemployment and/or interest rates is the only real way of testing the strength of homeowners ability to pay their massive mortgages.

Commenter

Irish Phil

Location

Date and time

June 03, 2014, 12:15PM

"seems to defy the law of economics"

LOL. Debt, asset prices and risk are all higher than before the GFC.

Commenter

Allan

Location

Prahran

Date and time

June 03, 2014, 12:16PM

Y'all still have to factor in the other Elephant in the room...Immigration...50,000 families have to live somewhere - I know, I'm renting to two of them...

Commenter

Prince Eugen

Location

Date and time

June 03, 2014, 12:58PM

You mean you're subsidising two of them by losing money.

Commenter

Allan

Location

Prahran

Date and time

June 03, 2014, 2:10PM

I was listening to a US commentator this morning, and he said that there was an expectation that the Feb would stop the taper and increase QE, if data disappointed. So that means the market can only go up because markets can rally on both good and bad news. I'm not confident the Fed knows what sort of mess it's creating, interesting times.

Commenter

Grizzly Adams

Location

Date and time

June 03, 2014, 10:41AM

But the Fed never "tapered" in the first place. Throughout the so called tapering a mystery buyer started purchasing US notes on the Euroclear market in Brussels. It's all just a scam to create the illusion of stability while the US Federal government is bankrupt, there is nothing justifying the value of the US dollar, and the Federal Reserve is the biggest robbery in the history of the US.

Read Ed Griffin's "The creature from Jekyll Island". The Federal Reserve is at the very centre of US - and Western - civilisational decline. The biggest geopolitical threat to our way of life.

Commenter

Dr No

Location

Sydney

Date and time

June 03, 2014, 11:08AM

US fed is just a cartel of bankers . They are not even controlled by US govt as much as the whole appointment process is supposed to look like it does.. They know exactly what they are doing , serving the interests of the banks.

Commenter

jimmy cartels

Location

Date and time

June 03, 2014, 3:45PM

"Japan's property bubble deflated over the course of 20 years."Sound like a nice orderly decline that Australia may indeed follow. No crash coming?

Commenter

Irish Phil

Location

Date and time

June 03, 2014, 4:27PM

After mining, banks divert nearly all lending to finance property

Some 95 per cent of the extra credit extended by banks since mid-2012 has financed residential or commercial property, according to an analysis that highlights the lopsided nature of the post-mining boom economic transition.

Good luck property owners and depositors at banks

Commenter

dunno

Location

Date and time

June 03, 2014, 10:33AM

Don't need luck...We've got politicians that will sacrifice all else.

Commenter

JohnBB

Location

Date and time

June 03, 2014, 10:42AM

arent we at the start of the biggest mining boom in the history of australia that will last for generations? see swan stevens jooliar etc etc?

Commenter

smilingjack

Location

Date and time

June 03, 2014, 11:19AM

Anyone have thoughts on BCI? Has been hammered lately but is it at it's lows yet?

Commenter

Gumly

Location

Mackay

Date and time

June 03, 2014, 10:30AM

Not yet, wait for the Iron ore price to fall a bit more, but after that I will be in!

Commenter

craig

Location

Date and time

June 03, 2014, 10:39AM

How can anyone make sense of the Australian Stockmarket. Yesterdsay Iron ore prices down 4% Spi Futures down 8 and market up Today Iron Ore up Spi Futures up 9 and market down. Have better chance at the casino !

Commenter

George

Location

Sydney

Date and time

June 03, 2014, 10:23AM

I can't help you with the iron ore prices but I can give great advice on the SPI. IGNORE IT!

Commenter

Gumly

Location

Mackay

Date and time

June 03, 2014, 10:55AM

"America's EPA will issue regulations that would seek to cut emissions from the US power plants by 30 per cent on 2005 levels by 2030"

Australia left looking stupid.

Commenter

Allan

Location

Prahran

Date and time

June 03, 2014, 10:23AM

Here, we agree. But no doubt Abbott and co will bluster it out, ignoring that alternative energy development is good for business.

Commenter

guy

Location

Pymble

Date and time

June 03, 2014, 11:11AM

What "bubble" are you referring to?

Commenter

craig?

Location

Date and time

June 03, 2014, 10:19AM

A couple of bloggers here seem to call any price rise a bubble. Most of us know that a real bubble is exemplified by what happened to the price of tulips in the Nederlands. They also call any price fall a collapse.

Commenter

bubbles

Location

galore

Date and time

June 03, 2014, 11:02AM

Everything!

Apparently any price rise is due to polyannas making a bubble and any price drop is due to intelligent analysis :-)

Note: when stating something is in a bubble, the number 1 rule is to not provide any analysis for your view and instead say "it's obvious,only a moron can't see it"!! :o)

Commenter

Life Is Good

Location

The Real World

Date and time

June 03, 2014, 11:18AM

Does this mean CBA is in a bubble?

Commenter

Brian

Location

the dog.

Date and time

June 03, 2014, 11:28AM

"So what does this mean if you’re looking for property? Is now a good time to buy? Well, if you want to avoid excessive prices it’s probably better to wait a while."

That's quite right. Property has peaked. So what? FHBs are well advised to wait and prices may creep down, but not fall through the floor. This is the new normal in housing market fluctuations. The sky won't fall in for those holding property already.

"Some 95 per cent of the extra credit extended by banks since mid-2012 has financed residential or commercial property"

Houses and holes.

Housing boom!

Commenter

Allan

Location

Prahran

Date and time

June 03, 2014, 10:12AM

Sorry Pal Loss of $50.00 for mentioning that.

Commenter

David

Location

Sydney

Date and time

June 03, 2014, 10:41AM

Some commenter yesterday,I believe it was 'pass the red', pointed out that someone has sent you on a mission to daily claim that the sky is falling in on property, but each new day finds the sky still very much in place.

Then there was this gem from you '“We are in a recession in gdp per capita terms and I called the top of property in Jan 2011. Right on both counts'.

Well, postpone the RBA meeting until Allan of Prahran can get there and points out the recession under their noses that they've missed. But sorry, 2011 was not the top of the market, 2014 is. 2011 was just picking up from the bottom in 2010.

Then, on the same day were again sneering at 'little landlords' you all but conceded you'd be one, if the price was right: 'Property is a good investment at the right price, somewhere around 30-40% below the current bubble prices.'

There is no bubble as the figures you were jubilantly quoting recently, showing not much capital growth in properties over the decade demonstrate. There will be no 30-40% drop in property unless there is a deep, deep recession, so deep, with so much unemployment and so little credit that there would then be no hope of anyone new joining the ranks of landlords. Deep down, you know it, Allan. So is that the basis for your misplaced shadenfreude on any glimmer of gloomy property news?

Commenter

guy

Location

Pymble

Date and time

June 03, 2014, 11:29AM

He he... someone's hurt. Cheer up guy, plenty of other things to invest in like wealth producing enterprises.

Commenter

Allan

Location

Prahran

Date and time

June 03, 2014, 11:52AM

Oh and LOL LOL why do we have emergency record low interest rates GUY? And budget deficits projected for the next decade?

Housing boom!

Commenter

Allan

Location

Prahran

Date and time

June 03, 2014, 12:09PM

Not hurting, laughing at your evasion. But please, explain to a grateful nation and the RBA how government deficit is caused by the property market. The misguided government appears to think it's a matter of reducing expenditure and raising revenue. Maybe you're thinking of the negative gearing benefits to property owners. Good luck waiting for a LNP govt to change that, (and therefore, good luck waiting for that property crash).

Err - Allan - if property was sucking up so much capital, wouldn't that be putting upward pressure on interest rates? Yet here we are in a record low rates period. Too simples. Your argument lacks legs.

Commenter

beria

Location

Date and time

June 03, 2014, 2:20PM

That's why house prices have been flat for four years.

Emergency low interest rates are for the rest of the economy that has also flatlined while population increases giving us negative growth per capita. So you see it has plenty of legs.

Commenter

Allan

Location

Prahran

Date and time

June 03, 2014, 4:01PM

rate decision is a no brainer. rates on hold lest the property bubble goes pop. no ka boom.the only way rates are going is down to keep the bubble inflated.when the bubble pops or starts deflating the state governments will lose billions in stamp duty. there are only so many speeding fines you can hand out.

Commenter

smilingjack

Location

Date and time

June 03, 2014, 10:01AM

Nothing will stop the bubble popping. Not even 500k more people in 13 months. What a scam. What a grubby scam. Turnbull, Abbott, Shorten....all Big Australia advocates...All leading Australia...All multiple property owners. All smart enough to know, there's no reason to populate but inflate their own financial interests.

Commenter

JohnBB

Location

Date and time

June 03, 2014, 10:13AM

Incorrect interest rates will go up with inflation, hence why Stevens has been warning those that could be getting in over the heads (interest rates will go up regardless of house prices). There's no conspiracy with goverment meddling in propping up property prices (although indirectly assisting FHBs has directly inflated), interest rates are historically low globally. interest rates will increase as long as CPI rises and people continue to spend money, interest rates rising indicates a growing, spending, working economy. If this stops interest rates hold. If this drops interest rates will fall ect. At no stage is anyone at the RBA looking at the price of houses and trying to increase or decrease this is a ludicrous view point held by many unfortunately. Happy investing

Commenter

Glenn

Location

Stevens

Date and time

June 03, 2014, 10:21AM

But what a time for the RBA to give Consumers a surprise boost to their confidence, slap out a 25bp today and surprise all of these manic depressants (shorters) talking the market down and we might get that added boost of the Aussie falling

Commenter

GK

Location

Date and time

June 03, 2014, 10:27AM

What bubble? As Allan of Prahran has pointed out, the capital growth of property over the decade has been unimpressive. By definition, that's no bubble.

Commenter

guy

Location

Pymble

Date and time

June 03, 2014, 11:13AM

Yes, Allan does like to have it both ways on his property rants doesn't he?

Commenter

Highlander

Location

Bundanoon

Date and time

June 03, 2014, 11:29AM

No guy, for the nth time there is no contradiction and it has been pointed out to you many times there has been negligible capital gain in SYDNEY, did you get that SYDNEY. And SYDNEY is still in a bubble because a decade ago they were at bubble prices and haven't deflated yet.

And no I'm not "down on property", stop making stuff up. Property is a good investment at the right price, somewhere around 30-40% below the current bubble prices.

Commenter

Allan

Location

Prahran

Date and time

June 03, 2014, 11:47AM

Yeah sure, Allan. No real property price growth in Sydney, growth in wealth and incomes, but a property bubble. Sure, makes perfect sense, all those things can coexist. Please point out any similar 'bubble' that has remained intact for more than a decade. Logic and history both suggest that a bubble in any market sector is a short term thing. But not in Prahran fantasy-world.

Sorry mate, the 'no contradiction' line is ridiculous.

Commenter

guy

Location

Pymble

Date and time

June 03, 2014, 12:47PM

The bubble in Japan has been deflating for over 20 years. There's one example. Point proved.

Commenter

Allan

Location

Prahran

Date and time

June 03, 2014, 1:08PM

Incorrect Allan. the property market in Japan cities is actually quite expensive still. Look it up home boy! They are crying the same story that we are over here.

Commenter

Big

Location

Dog

Date and time

June 03, 2014, 2:08PM

Exactly Allan, Japan's bubble deflated in an orderly manner. What makes you think that has not already been happening in Australia?

Commenter

Irish Phil

Location

Date and time

June 03, 2014, 2:13PM

But Allan, Japan's property market crashed in 1991 after 5 years of high prices. So it stopped being a bubble 20+ years ago, after only 5 years. Australian property has been steady or thereabouts for most of that two decades. So it never was a bubble. Point disproved. That's without looking at the vastly different economies and demographics of the two countries. Really, your glib cherry-picking of information as illustrated here brings you undone and leads you into these contradictory positions. You try to maintain a consistent line with inconsistent info, but to avoid exposure with short throwaway lines. Doesn't work.

Commenter

guy

Location

Pymble

Date and time

June 03, 2014, 2:30PM

Nope the bubble deflated for 20 years from a huge bubble, to a large bubble to a bubble. Not hard.

Commenter

Allan

Location

Prahran

Date and time

June 03, 2014, 3:57PM

Not incorrect dog, who said it was cheap?

Commenter

Allan

Location

Prahran

Date and time

June 03, 2014, 4:02PM

Funny how all bad economic news is blamed on the weather, but good news is never due to adverse weather conditions.

According to the Keynesian high-priests who are currently in charge of the US economy, the Q1 contraction was due to unusual cold weather. And now Aussie retail analysts are blaming warm autumn weather for downturn in retail spending....

Commenter

Dr No

Location

Sydney

Date and time

June 03, 2014, 9:48AM

Warren Buffett has just made a $1.9 billion bet on wind energy.

Tony Abbott has bet on coal.

Who will win the bet?

Commenter

Fred

Location

Date and time

June 03, 2014, 9:48AM

I might add, with the last two years being the hottest on record in Australia, and with 9 of the previous 10 years being the hottest on record, what can it possibly take for the Daily Telegraph to admit that their unhinged and demented claim that warming stopped 16 years ago is an outright lie?

Unfortunately, it's a lie that a few commenters on markets live fell for.

Commenter

Fred

Location

Date and time

June 03, 2014, 10:13AM

Wazza's in it for the money, nothing to do with ethical investments. He's made millions from big sugar and oil.

Commenter

J

Location

Date and time

June 03, 2014, 10:19AM

Alternative energy is the future. Abbott and co prefer the past. Conservatives are like that.

Commenter

alto

Location

Date and time

June 03, 2014, 12:07PM

Betting $1.9B on green energy just before your President announces major carbon reduction targets? That was lucky, wasn't it?!

Commenter

Gareth

Location

Sydney

Date and time

June 03, 2014, 12:49PM

@917am thanks edsUXC..............................glad its not a 80c plunge though rather a plunge from +80c.....had a small palpitation at first but beats per min back to normal now. mind still not at ease,might sell out if it lifts a bit.

EDs: Morning heart starter! Sorry about that, BSB. Fixed now. Chrs

Commenter

BearshapedBull

Location

Longshots Lounge

Date and time

June 03, 2014, 9:47AM

Why do you keep changing your location BSB ??? Do you mean UXC is a long shot but that doesnt make sense if you are thinking of selling ?? I reckon its the budget which has drawn negative sentiment towards the stock as it depends a lot on Govt. spending. If the business is good it will def. bounce back so all the best.

Commenter

clueless

Location

wonderland

Date and time

June 03, 2014, 10:19AM

@clueless other business' that i have shares in have put out something to update shareholders about any impacts from the budget...these guys....silenciostoploss trigger @ 75c..........down 11%

my lounge and mewhile not that prettyis a comfortable groovebut im on the move.mobile or lappy,trading on the go but happy

Commenter

BearshapedBull

Location

Longshots Lounge

Date and time

June 03, 2014, 10:50AM

Just a thought, but our national super is worth $1.6 trillion. Its estimated that will rise to $6 trillion in just 10 years. Most of that money is in funds that MUST be spent on shares (largely big conservative Australian shares). These funds have their allocation FIXED - that is, even if the fund manager KNEW that the market will crash next week they HAVE to keep buying more shares. Super cash flow to these dunds doesn't change much in good times or bad. Given all this, our super system is underpinning stock prices.

Commenter

Peter

Location

Oz

Date and time

June 03, 2014, 9:15AM

Yes...and as population ages, pensions will suck money out of super.

Commenter

Rob

Location

North Turramurra

Date and time

June 03, 2014, 9:53AM

thats right. money that is forcibly removed from you ( by our democratic society ) and given to people who then pay themselves 10's of millions $$ per year. then once all that is in place they tell you you cant touch it until your 60 - no make that 62 no wait 65 and on and on.the option to lose money for the banks and pay off your mortgage is absolutely not allowed. that would be ridiculous. this is stralya a beacon of democracy.

Commenter

smilingjack

Location

Date and time

June 03, 2014, 9:58AM

My super invested from '01 to now, despite the '08 crisis, because I leave it to blind freddy to invest my super it has bounced back remarkably well. I always wonder had I had control would I have taken it all out and parked it in cash and missed out on the last few years of solid return. Good old super, well said Peter.

Commenter

Fan

Location

of his super fund

Date and time

June 03, 2014, 9:59AM

My preservation age is 55. Lets not get this confused with pension age, for which the goverment is raising. pension age is the age you must wait to recieve the pension, not your super, how you spend your super after preservation age is entirely up to the indiviual.

Commenter

Super is not

Location

the pension!

Date and time

June 03, 2014, 10:11AM

@smilingjackyeah well you can have a crack at it yourself...ever heard of SMSF?

Commenter

BearshapedBull

Location

Longshots Lounge

Date and time

June 03, 2014, 10:13AM

Wrong. You can move your super to any type of investment fund you want, even cash.

Commenter

Allan

Location

Prahran

Date and time

June 03, 2014, 10:13AM

for anyone born after 1964 the preservation age is 60 and all subsequent governments will push that higher.Im talking about the bulk of australians who dont want to drop at least a couple of grand to set up and maintain a smsf.each year.there are only about 500000 smsf's in australia leaving what?? 15 million others having their salary stolen / forcibly removed from them each week.60 will absolutely 100% go to 65in the meantime please hand over half a million plus to your friendly kind caring local bank in interest payments. even better stretch that out to a 40 / 50 year loan and hand it to your kids. can you imagine what would happen to banks if an extra 12% of your salary went on your mortgage each week. good bye banks.

Commenter

smilingjack

Location

Date and time

June 03, 2014, 10:59AM

@Allan. Yes we all know that SMSF exist. My point is that the large bulk of super money is not in these funds. The are in fixed allocation offerings that might have at most 5% cash (and can't increase that proportion). Whether you think super is good or bad, I'm thinking that the fact that over the next 10 years $4+ trillion dollars is expected to pour into these funds and they MUST buy stocks means future market price growth is already largely funded?

Commenter

Peter

Location

Oz

Date and time

June 03, 2014, 11:21AM

Nope doesn't have to be a SMSF. You just have to go online and tick a box in any super fund.

Commenter

Allan

Location

Prahran

Date and time

June 03, 2014, 11:28AM

"and they MUST buy stocks "

Who says they MUST buy stocks. Show me the legislation.

Commenter

Allan

Location

Prahran

Date and time

June 03, 2014, 11:29AM

all i know is i have $250k in super from 13 years of work. it can keep doing its thing for all I care. well done Mr Super.... well done!

Commenter

confused

Location

also

Date and time

June 03, 2014, 11:36AM

@Peter: you don't need a SMSF, just change your allocations. It is very straight forward. Go 100% into cash if you wish.

Commenter

Irish Phil

Location

Date and time

June 03, 2014, 11:46AM

$250K in super? Well done you.

Commenter

I I I

Location

me me me

Date and time

June 03, 2014, 12:07PM

yeah how goof is that? $250k im pretty happy with it :)

Commenter

confused

Location

also

Date and time

June 03, 2014, 1:05PM

Fund Manager's tend to change their allocation to sharea after the fact. I remember getting a notice from one that they were reducing allocation in 2008/09 after the big fall. Exact opposite timing to wealth creation. We are at the start (3yrs in) of BB retiring. Give it another 5 or 6 years and see if outflows from shares kick up.

Commenter

DaKlingons

Location

NZ

Date and time

June 03, 2014, 1:16PM

Sort of missing the point. I'm not talking about where our nation's super money COULD be, I'm talking about where it IS. It IS in fixed allocation funds for the most part. These funds might have 60% Oz stocks, 35% overseas and 5% cash. These funds can not vary that allocation for any reason. So every month these funds receive many more millions in employee contributions that they HAVE to invest in the stock market. The can choose the stock but they can't chose not to invest it.So while individual investors might be thinking the market is overpriced. We have the massive institutions with no options but to keep shoveling in money. ($4+ trillion over the next decade). It seems to me that is quite enough stimulus to keep the Oz stock market going strong for a long time yet.

Commenter

Peter

Location

Oz

Date and time

June 03, 2014, 2:06PM

Peter. When individual billionaires start shorting the hell out of the ASX, that shoveled in money becomes empty bags of manure. It is credit money only. It is becoming rather evident that only a few % of stock trading companies / individuals will every make real money from the game.